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About Example 2:
Entity references defined in the document are their own nodes. You should carefully look at print_r($node);
Next please don't open one report about two things (even if they look the same).

For the first bug, you should consult tightly the libxml2 documentation. libxml2 does the conversion on its own and only hell knows why you get what you get.
It's probably a runtime configuration option of libxml2 which most likely also isn't implemented in the domxml interface. Or maybe its even expected. Anyway, best is you take a look at libxml2 directly .
Feedback.